Tourism got its official start here when, in c.1881, General Powell Clayton and former Arkansas governor founded Eureka Springs Improvement Company to attract railroads to Eureka Springs. With the help of investor Richard Kerens, a line of the Frisco Railroad was eventually built, reaching the town in November 1881. Now, instead of traveling on winding roads on wagons, visitors could get to Eureka Springs much faster. The hotel was built to accommodate this influx of visitors. Clayton didn't just want to build a hotel, he also developed Eureka Springs into a full-fledged town, complete with new houses, streets, water and sewer lines, and even an electric trolley.
Clayton went on to become U.S. Minister to Mexico (1897-1905, when he died) and Kerens eventually became U.S. Ambassador to Austria-Hungary 1909.